SHANGHAI, Aug 28 (Reuters) - China’s major stock indexes rose to 20-month highs on Monday, spurred by financial shares and a spate of forecast-beating earnings reports from state industrial giants.

Sentiment was also bolstered by signs that China is stepping up efforts to restructure its lumbering and often inefficient state-owned enterprises (SOEs) by opening the door to more public and private investment in the long-protected sector.

The Shanghai Composite Index gained 0.9 percent to 3,362.65 points, extending its rise above the closely-watched 3,300 mark, which has proved to be a stiff resistance level in the past.

There have been only fleeting breaches of 3,300 since 2015 -- and the SSEC is getting into technically overbought territory -- but analysts said a combination of robust earnings and economic reforms could give the rally more staying power this time.

The blue-chip CSI300 index rose 1.2 percent to 3,842.71 points.

China’s benchmark stock indexes have struggled to make headway since the government mounted a massive rescue in late 2015 after prices plunged. But traders said the prospect of sustained gains now could lure many investors back.

Financial shares led gains on Monday, with brokerages surging as much as 6 percent at one point on expectations they will be the biggest beneficiary of a strong stock market recovery.

“The surge in brokerage shares means the upward trend of the broad market is confirmed,” said Yang Delong, chief economist at First Seafront Fund Management Co.

“The 3,300-point level is now under investors’ stride. We’re already in a bull market, albeit a slow one.”

Earnings for China’s industrial firms rose 16.5 percent in July from a year earlier, data showed on Sunday. Though the pace eased from June, profits in January-July jumped 21.2 percent.

Adding to optimism are signs that Beijing is intent on making the state sector more efficient, which could spur merger and acquisition activity and further reduce excess capacity in some industries which has been weighing on returns.

Stronger earnings and balance sheets could also give long-ailing state firms more room to start paying down a mountain of debt, reducing risks for the banking sector.

The official China Securities Journal reported on Monday that Beijing has set up a fund dedicated to supporting so-called “mixed-ownership” reforms by SOEs. Separately, Premier Li Keqiang said over the weekend China is looking at fiscal and tax policies that support upgrading its manufacturing sector. (Reporting by Luoyan Liu and John Ruwitch; Editing by Kim Coghill)